OTTAWA, March 1 (Reuters) - Canada's telecom regulator ruled on Wednesday that wireless startup Sugar Mobile cannot continue to use Rogers Communications Inc's network to keep customers connected, a decision critics said was a blow to consumers who face high prices.
Ice Wireless, which operates a mobile network in Canada's northern territories and northern Quebec, brought the issue before the Canadian Radio-television and Telecommunications Commission (CRTC) in February last year, saying that Rogers planned to end a reciprocal agreement that allows customers to use its network when they are roaming.
Sugar Mobile, an affiliate of Ice Wireless, is a mobile virtual network operator that offers wireless service across Canada using wi-fi or cellular data accessed through a SIM card registered to Ice Wireless.
Because of Ice Wireless' agreement with Rogers, Sugar's 5,500 users were able to also access Rogers' network. The company launched a C$19 ($14.23) a month program to serve customers who do not live in the north, allowing them to choose a phone number with an area code from anywhere in Canada.
Ice Wireless had argued that Sugar users were accessing the Rogers' network on an incidental basis as its service is provided primarily through wi-fi.
But the CRTC ruled that the company had improperly allowed Sugar users to "obtain permanent rather than incidental" access to Rogers' cell network.
Advocacy group OpenMedia said on Wednesday the CRTC's decision effectively paralyzes Sugar and called for a review of rules around smaller companies roaming on established providers' networks.
Samer Bishay, Chief Executive of Ice Wireless and Sugar Mobile, said he was disappointed and would review the decision in detail before deciding the company's next steps.
The CRTC gave Sugar 50 days to stop using Rogers' network. For now, customers will be able to use Sugars' service uninterrupted, Bishay said.
David Watt, senior vice-president of regulatory affairs at Rogers, said the company was pleased with the decision.
"This was about violating a roaming agreement, plain and simple," Watt said.
Critics say that the cost of phone services are kept high due to the fact that Canada's telecom landscape is dominated by just three large companies - Rogers, BCE Inc and Telus Corp.
"This decision is very bad news for long-suffering wireless customers," OpenMedia's Katy Anderson said in a statement.
$1 = C$1.3348 Reporting by Leah Schnurr; editing by Diane Craft